Bank warns of "collapsing house price nightmare" in UK

The house price problem can be linked to the first time buyer market being swamped with buy to let purchasers desperately trying to sort out pensions, after your pal Gordon kicked the pensions industry in the nuts by removing £5billion per annum from it. The price rises at the bottom forced the prices of the whole market up phenomenally. So it is Gordons problem IMHO.

In message , curiosity writes

You are suggesting that in a market that is falling a buyer should reduce their offer sometime between making the offer and exchange, so presumably in a rising market that same buyer should increase their offer in a similar manner.

In message , Tumbleweed writes

But some are more made up than others!

eh?

It doesn't matter what The Magic Asset is. The evidence is that during every credit bubble, most of the population involved will celebrate their good fortune to be living in a New Financial Era. It'd be the same if it were tulips that were again multiplying in price.

"Eating the Seedcorn". You've just identified the key issue in these credit bubbles. Welcome to the New Era!

The government in power wll get the blame. Quite often these things don't just put the Party in charge out of power for a generation but actually destroy the Party.

Mind, they're not generally too kind to the other partries either.

FoFP

Inasmuch as he did litte to stop it. If we are to have some kind of Soviet-style central bank controlling interest rates, then it might have been an idea to target both general and *asset* inflation. It's not like we don't have enough history to inspect and decide that asset inflations have Bad Results.

I'm in favour of free markets, including i the price of money, myself, but Brown clearly is not.

No, that'd be Alan Greenspan.

It'd have been unpleasant. However, the evience is good that the less debt built up before the crash, the smaller the crash, so better sooner than later.

FoFP

Sure, but had he allowed the Bank to target house price inflation, Labour would have been out in 2002. History indicates that the politicians will do what's expected of them at this stage in the cycle, and what was expected of them was to let it rip and the people have their fun. The primary crash had not exhausted people of their mania for property. The secondary crash will achieve that.

No. Brown should hae let markets set interest rates based on the demand for and supply of money, and ensured that the supply was linked to some commodity rather than Bank printing according to government whim. It's

FoFP

Bingo! Give the man a coconut.

Of course this Cunning Plan for pensions ignores the fact that if the next generation of workers can't afford to pay the taxes that will keep us in pensions, then they won't be able to afford the rents that are intended to substitute for the taxes.

Of course Plan B would be to sell the houses, but if there are fewer folks in that next generation, then...

FoFP

What is it with you folks expecting the state to "manage" economies. Did you all go through some sort of Soviet brainwashing while I was asleep? What makes you think that The State must manage these things at all?

FoFP

But thats not too much of a problem, with the lack of moral example by members of the government and celebrities everyone will be divorced several times over so there will be a need for more households to house fewer people.

I certainly accept that the complex and time consuming nature of the completion process does mean that sometimes people are put in a situation where they have to renegotiate the price or pull out of the transaction due to factors beyond their control and in those circumstances I wouldn't criticise them. I reserve my ire for gazunderers and gazumpers - those who try to change the agreed price at the last minute not out of neccessity but out of greed.

Totally agreed.

I think it's unfair to blame capitalism per se for gazumping/gazundering - human greed is the culprit. For a capitalist system to function properly people actually have to be able to enter into transactions with others in the expectation that those others will stick to their side of the bargain.

Andrew

No, in a rising market, it would be the seller who could've misjudged, so it would be them who would renegotiate or end the sale.

Jim.